Lose the pricey coffee habit and give your savings a real kick start

21st March 2016

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By cutting out your daily cappuccino you could give your savings a £10,000 boost in just over 13 years, according to figures calculated by Fidelity International.

For example, if you ditched your daily shop-bought coffee at £2.50 a day, five days a week and invested this amount into an ISA, you would have £50 a month to invest.

Over the years, your ISA Cappuccino Plan could lead to significant returns of more than £7,000 after 10 years, more than £12,000 after 15 years or more than £18,000 after 20 years, assuming a rate of growth of 5% a year.

ISA cappuccino plan – £2.50 a day / £50 a month
Years invested Initial amount invested Final amount
5 years £3,000 £3,131.70
10 years £6,000 £7,023.04
15 years £9,000 £12,015.08
20 years £12,000 £18,189.26
Save £10,000 in 13 years and 2 months

If the thought of giving up your shop-bought coffee makes you twitch, or want to reach your investment goals sooner, there are a number of other lifestyle changes you could make such as bringing your lunch to work, cancelling that gym membership you never use or giving up smoking, which could all help you hit the £10,000 mark sooner.

You could also consider swapping a weekly travel card for a yearly travel card, cycling to work or changing your mortgage repayment plan.

Maike Currie, investment director for Personal Investing at Fidelity International, said: “Saving into an ISA needn’t be daunting and you certainly don’t need to have large amounts of spare cash to make the most of your annual ISA allowance. In fact, you could quickly build up a significant ISA pot by simply saving on small daily expenses, such as the cost of your daily cappuccino.

“The longer you can save for, the better given the snowball effect of compounding which could make a considerable difference to your investment’s total returns over the long term.

“Investing little and often rather than in a lump sum also has a number of other benefits. For example, drip-feeding money into your ISA can help smooth any ups and downs that you may experience from investing in the markets. You also don’t need to worry about timing the market.”

Quit the gym ISA plan – £80 a month
Years invested Initial amount invested Final amount
5 years £4,800 £5,132.58
10 years £9,600 £11,600.50
15 years £14,400 £19,677.74
20 years £19,200 £29,663.61
Save £10,000 in 8 years and 11 months

 

Bring your lunch to work ISA plan – £5 a day / £100 a month
Years invested Initial amount invested Final amount
5 years £6,000 £6,466.51
10 years £12,000 £14,630.17
15 years £18,000 £24,757.33
20 years £24,000 £37,277.50
Save £10,000 in 7 years and 4 months

 

Quit smoking ISA plan – Five packets a week at £9.60 / £192 a month
Years invested Initial amount invested Final amount
5 years £11,520 £12,611.44
10 years £23,040 £28,370.79
15 years £34,560 £47,881.30
20 years £46,080 £72,002.09
Save £10,000 in 4 years and 1 month

 

 

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